The Washington Post Is Panicked, Again!!!!!! (Dean Baker)

[chill_wind]

December 14, 2009

The Washington Post Is Panicked, Again!!!!!!


The Washington Post is widely known for giving shrill warnings about the deficit danger, but this one is really over the top. It is literally titled: "the coming debt panic." The piece tells readers of the urgency of reining in the debt, telling readers that: "failing to do so will lower the national standard of living."

Sorry folks, this is not true. To push its deficit reduction position, the Post is doing what folks in Washington call "dissembling." They have another word for it everywhere else. Standard economic models do show that deficits can slow economic growth by crowding out investment, they do not show that this impact will be large enough to actually lead to declining standards of living, or at least not any time soon.

The editorial also has the gall to emphasize the problem by telling readers: "consider: In the space of a single fiscal year, 2009, the debt soared from 41 percent of the gross domestic product to 53 percent." This should have readers have everywhere setting their newspapers and computers on fire.

Yes, the debt rose from 41 percent of GDP to 53 percent, but the reason was not profligate spending by Congress or even irresponsible tax cuts. The reason for the surge in the debt was the economic crisis brought about by the collapse of the housing bubble.

The Post could not be bothered to write about the housing bubble as the danger was mounting, only giving attention to the likes of Alan Greenspan and Ben Bernanke, who told us everything was fine, or even better, presenting readers with the assessment of David Lereah, the chief economist of the National Realtors Association and the author of the 2006 bestseller, Why the Real Estate Boom Will Not Bust and How You Can Profit From It.

Now that the economy has collapsed due to the incompetence of the people whom the Post deems experts, the Post is going back to those exact same experts and telling readers that we have to cut Social Security and Medicare.

I'd write more, but it's difficult on a burning computer.

http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=12&year=2009&base_name=the_washington_post_is_panicke

[depakid]

1. The Post is a sorry propaganda rag- nothing more, nothing less

[chill_wind]

2. And Dean outs and excoriates them-- over and over

He confines himself to his own areas of expertise-- as an Economist-- but just looking even more narrowly at what he's found and written, on what they've been doing around the subject of social security, it's just unbelievable.

I did a search just now:

http://www.prospect.org/csnc/blogs/beat_the_press_search?search=social+security

If people don't have Dean Baker in their bookmarks, they need to.

[Captain Hilts]

3. TonyKornheiser called the Washington Post the "Wall St. Post" this morning. nt

[chill_wind]

7. This is the same paper that buried the TARP IG's blistering report

(taking one Timmy Geithner to the woodshed) a few weeks ago on page 24, while the NYT ran it on the front page.
Guess they decided nobody in establishment DC would be all that interested in what that report had to say.

(self edit-- page 24, not 39)

[chill_wind]

4. Some folks must love the WAPO whoring

and hate the critics like Baker. Unrec idiots.

[BennyD]

5. The standard of living could indeed decrease

but exactly how soon depends on a number of factors. If our debt continues to rise, inflation will occur and that WILL result in a lower standard of living as goods and services will cost more and more.

The "deficit reduction position" should be a position that everyone embraces. We can't continue to mount up all this debt and not expect to have to pay for it eventually.

"Standard economic models do show that deficits can slow economic growth by crowding out investment, they do not show that this impact will be large enough to actually lead to declining standards of living, or at least not any time soon." "Any time soon" is a relative term, and that concerns me.

EDIT to add: The inflation rate for last month was 1.8%

[chill_wind]

6. Here's his answer to the deficit hawks

just as recently as last month

November 23, 2009 01:38 PM

The Budget Deficit Crisis: The Blame Is Bipartisan

The country is being bombarded with stories claiming that record budget deficits threaten our children's future and jeopardize the credibility of the dollar. These stories are a serious problem -- they have hugely confused the public about the nature of the country's economic crisis. And both parties share the blame.

Starting with the reality behind the scare stories -- trillion-dollar deficits are really huge relative to the money that any of us will ever see in our lifetime. But this is an absurd measure. The United States is a country with more than 300 million people. It doesn't matter that a trillion dollars is a huge amount to any of us individually. What matters is the size of the deficit and the debt relative to the size of the economy.

Only people who want to deceive the public would talk about the deficit or debt in "trillions" of dollars. This is a very simple lie-detector test since honest economists and policy analysts always refer to these sums relative to the size of the economy.

Relative to the size of the economy, the deficits that we are running are large and the debt that we are projected to incur is substantial, but the deficit level is still not coming close to the levels hit in World War II. Nor is the debt level projected to reach post-war peaks or the levels sustained by countries like Italy and Japan. The idea that we are near some debt-driven crisis is absurd on its face.

(...)

Let's face it: The deficit hawks will say anything to advance their agenda. Even worse, the media will print it.

This deficit nonsense should have been put to rest long ago, but both parties have hyped it to advance their ends. Currently, the Republicans are making headway in the polls by blaming the Obama administration for a deficit that is primarily the result of economic mismanagement during the Bush years.

But Republicans don't have a monopoly on demagoging the deficit. During the Bush years, many Democrats spoke of the Bush deficits in cataclysmic terms. This was absurd. The deficits were larger than was desirable during part of the Bush administration (large deficits in 2002 and 2003 were helpful in boosting the economy), but they were not hugely out of line. There is certainly no story that can pass the laugh test in which these deficits are responsible for the collapse of the housing bubble and subsequent recession.


(much more)

http://www.huffingtonpost.com/dean-baker/the-budget-deficit-crisis_b_367867.html

His Center for Economic Policy and Research website

http://www.cepr.net/